Startup Obstacles – Industry Experts Weigh In

TRSA's recent panel on "Tips and Lessons" for newcomers to the linen, uniform and facility services business included: (L/R) Brian Polatsek, Ecobrite Linen; Bob Corfield, Laundry Design Group LLC; J.R. Ryan, MODRoto; and Keith Ware, Lavatec Laundry Technology Inc. 

One of the ironies of American capitalism is the fact that although the odds against a new business making it beyond the first few months are formidable, hundreds of new companies, including many in textile services, manage to overcome these challenges and lead successful enterprises.

Attendees at a June 7 TRSA panel discussion heard from a group of four TRSA and industry veterans with a variety of backgrounds who’ve gained insights on what it takes to beat the odds and have a business survive and, ultimately, thrive.

The panelists included Brian Polatsek, Ecobrite Linen, Skokie, IL; a barely three-year-old business that’s currently in growth mode; Bob Corfield, an industry consultant with Laundry Design Group LLC; J.R. Ryan, president and COO, MODRoto; and Keith Ware, vice president of sales, Lavatec Laundry Technology Inc. Moderating the discussion was TRSA’s Bill Mann, a retired director of industry affairs for the association who continues to work on a consulting basis.

A sampling of key issues addressed by the panelist include:

Study the market: Ryan noted that anyone entering a laundry or related business must understand what the market is like in terms of costs, competition, pricing, regulatory challenges and any other factor that may impact the business. The more educated you are, the more likely it is that you’ll succeed.

Question everything: Ware suggested that would-be laundry operators should apply a “pessimistic” approach that doesn’t shy away from asking hard questions. For example: Is there a real opportunity in the market, can you deal with pricing pressure from national companies? Do you have access to labor and capital to make a go of the business? In other words, as Ware put it, “Don’t wish it’s going to happen. Plan to make sure it’s going to happen.”

Review financial details: Corfield suggested that entrepreneurs conduct detailed financial analyses on all aspects of the business proposal. “Do a very deep financial dive,” he said. “What do you need to do to grow?” Make sure there’s a clear basis behind the business plan. Look for specialty areas and avoid the “fatal mistake” of taking on the wrong kind of work at the wrong price, he said.

Find you niche and focus: Polatsek entered the laundry business after working as an energy consultant to nursing homes. He noticed that in-house laundries were costing his clients more than he thought they should pay for laundry services. He saw a potential niche because large companies weren’t targeting this area and he could provide the service more efficiently than the nursing homes. “Find some niches that others aren’t interested in,” he said, noting that the nursing homes were happy to forgo this costly service that wasn’t part of their core mission. “That’s where the opportunity is.”

Expect the unexpected: Ryan noted that no matter how carefully you plan, unexpected challenges can and do arise in business, particularly on regulatory issues. He told a story of a plant he operated in the Northeast where a large manufacturer relocated its operations. Consequently, the local publicly owned treatment works (POTW) lost its major customer. To make up for this revenue shortfall, commercial customers such as Ryan’s company saw their water rates rise by 67% overnight. “It’s a lot of expense, it’s a lot of headaches and they can put you out of business,” he said.

Bottom line? While the challenges facing entrepreneurs in the laundry business are significant, operators in many cases can overcome them with a combination of careful planning, quick responses and hard work.